Friday, June 22nd 2018

NVIDIA's Next Gen GPU Launch Held Back to Drain Excess, Costly Built-up Inventory?

We've previously touched upon whether or not NVIDIA should launch their 1100 or 2000 series of graphics cards ahead of any new product from AMD. At the time, I wrote that I only saw benefits to that approach: earlier time to market -> satisfaction of upgrade itches and entrenchment as the only latest-gen manufacturer -> raised costs over lack of competition -> ability to respond by lowering prices after achieving a war-chest of profits. However, reports of a costly NVIDIA mistake in overestimating demand for its Pascal GPUs does lend some other shades to the whole equation.

Write-offs in inventory are costly (just ask Microsoft), and apparently, NVIDIA has found itself in a miscalculating demeanor: overestimating gamers' and miners' demand for their graphics cards. When it comes to gamers, NVIDIA's Pascal graphics cards have been available in the market for two years now - it's relatively safe to say that the majority of gamers who needed higher-performance graphics cards have already taken the plunge. As to miners, the cryptocurrency market contraction (and other factors) has led to a taper-out of graphics card demand for this particular workload. The result? NVIDIA's demand overestimation has led, according to Seeking Alpha, to a "top three" Taiwan OEM returning 300,000 GPUs to NVIDIA, and "aggressively" increased GDDR5 buying orders from the company, suggesting an excess stock of GPUs that need to be made into boards.
With no competition on the horizon from AMD, it makes sense that NVIDIA would give the market time to assimilate their excess graphics cards. A good solution for excess inventory would be price-cuts, but the absence of competition brings that to a halt: NVIDIA's solutions are selling well in the face of current AMD products in the market, and as such, there is no need to artificially increase demand - and lower ASP in the meantime. Should some sort of pressure be applied, NVIDIA can lower MSRP at a snap of its proverbial fingers.
Of course, this begs the question of what exactly will NVIDIA do with its R&D on other graphics product generations that are falling further and further into the future. Volta never saw the light of day in consumer graphics card products, and we're already talking about the launch of a Turing or Ampere architecture from the company - hoping it would be released in Q3 of this year. There is R&D investment that will lose its impact and chance to generate the revenue expected at its inception. Sure, revenue keeps coming in from older generation hardware - but these delays allow the competition to try and leapfrog, performance and technology-wise, the interim NVIDIA architectures that haven't been released to market, setting their sights on future releases. We're left with an NVIDIA that only partially capitalized their Volta R&D in the pro and server segment, for example, and wasted funds that could be better spent elsewhere. But opportunity cost is part of this business, right? Sources: Seeking Alpha, via TechSpot
Add your own comment

70 Comments on NVIDIA's Next Gen GPU Launch Held Back to Drain Excess, Costly Built-up Inventory?

#1
Basard
Vendors have made plenty of profit lately, they will live.
Posted on Reply
#2
Gasaraki
People need to stop reporting from the one article. That article is blatantly trying to lower nVidia stocks and at the very end they disclose that they have short stock on nvidia. So they are trying to lower nvidia stock so so they can make money.
Posted on Reply
#3
Raevenlord
News Editor
Gasaraki
People need to stop reporting from the one article. That article is blatantly trying to lower nVidia stocks and at the very end they disclose that they have short stock on nvidia. So they are trying to lower nvidia stock so so they can make money.
This article simply touched upon that one article and acknowledges its existence, but it takes a completely different angle and actually tries to do more with that than just "NVIDIA bad at math, GPU piles now".
Posted on Reply
#4
efikkan
Overstock of OEM graphics cards should not hold back the launch of new consumer cards at all. OEM cards are mostly low-end or lower mid-range cards sold in prebuilt systems by vendors like Dell, HP, etc. Buyers of such systems don't care if the system have Volta or Pascal, or if has Coffee Lake or Kaby Lake. OEM models are usually slower to be refreshed, and OEM parts stay on market long after their retail counterparts. If an OEM returns cards now, it might not even be Pascal cards, but probably old Maxell and Kepler cards.

So if this is just OEM overstock, then this is absolutely nothing. But if this story repeats for AIB vendors, then there is something to it.
Posted on Reply
#5
Vya Domus
Gasaraki
People need to stop reporting from the one article. That article is blatantly trying to lower nVidia stocks and at the very end they disclose that they have short stock on nvidia. So they are trying to lower nvidia stock so so they can make money.
Nvidia hasn't launched a new consumer product line for more than two years. Any company that does not launch new products even if they have the majority of marketshare will still be put under a question mark by investors.
Posted on Reply
#6
Assimilator
All I care about is if this means I can get a GTX 1080 Ti for cheap.
Posted on Reply
#7
rtwjunkie
PC Gaming Enthusiast
Vya Domus
Nvidia hasn't launched a new consumer product line for more than two years. Any company that does not launch new products even if they have the majority of marketshare will still be put under a question mark by investors.
Gaming GPU’s are not their only product/line of business. They are doing quite well, even being admitted to the S&P100 this month. Investors are quite happy, I think.
Posted on Reply
#8
ppn
When the crypto blows, there will be 5 million cards flooding the marked, not just 0.3. so my guess is 1080ti at 199$ is acceptable. if mined with 3 month remaining warranty 99$.
Posted on Reply
#9
Disparia
Could be nice. Just down the street is a guy with 25 x 1070 Ti. He's holding out on a someone buying the entire rig and won't part it out -- yet.
Posted on Reply
#10
xkm1948
And somehow the GPU price is still outrageously high. No thank you keep your expensive Pascals
Posted on Reply
#11
Imsochobo
Vya Domus
Nvidia hasn't launched a new consumer product line for more than two years. Any company that does not launch new products even if they have the majority of marketshare will still be put under a question mark by investors.
What process nodes have been viable for nvidia ?: 14nm? no, 16nm ? it's almost like a high performance 20nm and that's how they win in gaming.
12NM came and was an actual upgrade but a minor one at that.
GDDR5 and 5x have been around for a long time and they don't want to make 384 width bus cards like the old times.

The tech out there haven't supported a new gpu, you can slap an architecture on the same node but it rarely accounts to much.

rtwjunkie
Gaming GPU’s are not their only product/line of business. They are doing quite well, even being admitted to the S&P100 this month. Investors are quite happy, I think.
Yeah, I don't have any concerns for nvidia other than:
next gen is on 12nm ?
amd will be on 7nm shortly thereafter and will it be very competetive, the longer next gen nvidia drags on the closer it'll be to actual good 7nm chips.

Regardless nvidia has a lot of legs to stand on so no worry for nvidia, a short slap by amd to nvidia never did anyone any harm in the consumer market too, nvidia will sell a lot regardless of performance as we've seen before, crappy products and 50% share (even worse products than Vega!)
Posted on Reply
#12
TristanX
Write off won't be that costly, as GPU like 1080 costs some 50$ to make (chip only, excluding R&D costs). There may be problems with limited 7nm capacity or GDDR6 availability
Posted on Reply
#13
jabbadap
Assimilator
All I care about is if this means I can get a GTX 1080 Ti for cheap.
Probably not, I doubt this has anything to do with gp102. Most probably punch of gp106s maybe some gp104 too, those are the ones used on mining.

Imsochobo
What process nodes have been viable for nvidia ?: 14nm? no, 16nm ? it's almost like a high performance 20nm and that's how they win in gaming.
12NM came and was an actual upgrade but a minor one at that.
GDDR5 and 5x have been around for a long time and they don't want to make 384 width bus cards like the old times.

The tech out there haven't supported a new gpu, you can slap an architecture on the same node but it rarely accounts to much.



Yeah, I don't have any concerns for nvidia other than:
next gen is on 12nm ?
amd will be on 7nm shortly thereafter and will it be very competetive, the longer next gen nvidia drags on the closer it'll be to actual good 7nm chips.

Regardless nvidia has a lot of legs to stand on so no worry for nvidia, a short slap by amd to nvidia never did anyone any harm in the consumer market too, nvidia will sell a lot regardless of performance as we've seen before, crappy products and 50% share (even worse products than Vega!)
Of course they will make 384bit high end gaming card, 4k144Hz monitors needs all bandwidth possible. Other option would be hbm and I don't see nvidia going there as long as there are cheaper good enough options available.
Posted on Reply
#14
Dave65
How terrible for Nvidia :shadedshu:
Posted on Reply
#15
fynxer
Once in for all nVidia does not care about gamers ONLY it's bottom line, nothing else.

Sure, companies are in it to make money but there is a limit of how much to hold back and milk a market before you make real damage.

Just look at Intel, they hold back the core count for the consumer segment for like 6-7 years and sales of the PC industry went down 25%, now when AMD made comeback we are on our way to 32 cores for customer in just a year and it will not stop there, probably 48-64 cores next year. Sales are for the first time in 6-7 years looking to recover in the PC industry but much damage is done and it will take time to recover sales.

By skipping gpu generations in gaming nVidia are holding back the whole gaming industry and start to make real damage, specially in VR development that need much more gpu power to make better VR headsets with much higher resolution and frame rate. They can not release these products without at least 200-400% more gpu power.

Game developers that make fantastic games count on a certain progress in gpu gaming market during development.

Developing a game that will be finished in say 3 years they make plans for graphics and functions for that game to what the average gpu power will be at the hand of gamers at end of those 3 years when the game is expected for release.

If then no progress in gpu power is made they are forced during development to reconsider both cutting back on graphics and functionality of the game before release.

Sure you say, nVidia will sooner or later release a new architecture, yep they will but it will then take years from that release before that architecture gets used in games since people must have time to upgrade to build a consumer base with that architecture.

The only thing nVidia is doing is holding back the gaming evolution to line their pockets with more money at cost of all gamers.

Also the main stream graphic cards 1050/1060 visual quality are starting to match the visual quality of XBOX ONE X and PS4 Pro making inexperienced gamers buy these consoles instead of PCs thus driving gamers in to AMD's hands since they make the gpu:s in both current consoles and also the coming next gen consoles.

So when Jen-Hsun Huang smiles at you and ever so gently is buttering you up with his smooth tongue that he cares about gamers, imagine a couple of horns on his head and you will see the true face of Jen-Hsun Huang on top of that slick leather jacket.
Posted on Reply
#16
Papahyooie
Why don't they just release the next generation, and rebrand these chips as "GT" 11 series cards? They do that kind of thing all the time. It's just OEM. Let's be real here, nobody buying OEM will know the difference, and does it really matter what number is printed on it?
Posted on Reply
#17
xorbe
Basard
Vendors have made plenty of profit lately, they will live.
They spend it as fast as they make it, and get addicted to it so fast that they assume it'll be the level of profit for all following quarters.
Posted on Reply
#18
R0H1T
xorbe
They spend it as fast as they make it, and get addicted to it so fast that they assume it'll be the level of profit for all following quarters.
Yes but firms like Apple (I know, totally different league) or Samsung, Intel, Nvidia have more than enough levers to pull & maintain high(er) margins & profitability. Then there's the fact that most of them are near monopolies in their key areas of revenue.

In short they'll come back down to earth only when people stop buying their hype & halo products!
Posted on Reply
#19
Casecutter
jabbadap
Probably not, I doubt this has anything to do with gp102. Most probably punch of gp106s maybe some gp104 too, those are the ones used on mining.
This is what would be useful knowing going forward, which pieces of silicone are they holding? I would say you're right in thinking gp106 and gp104. But given they just release the 1050 3Gb I'm not sure they might have gp107's they what to move out. If the gp104 that makes sense as that can be used in that GTX 1060 6Gb the released just last March. Although, with GDDR price and availability they won't want 8Gb cards (1070/1080) while they don't want to flood the market with high-end card as that reduces the pool of those who would look at Next-Gen. While they don't want to flood the market with GTX1060 6Gb as that would stagnate the market of 1440p G-Sync they've told monitor vendor looking to push next.

fynxer
Sure, companies are in it to make money but there is a limit of how much to hold back and milk a market before you make real damage.
Your correct in the ideas of loss of R&D prowess as they have to "rollup" some acceptable architectural improvement into a further down the road architectural roadmap, where that is lost in the big picture and can't capitalize on such R&D time and effort. And this is true not just for Nvidia but the Gaming Houses that are aligned with Nvidia and their Gameworks add-ins.
Posted on Reply
#20
Totally
Gee, Nvidia it's not hard. What happens when something is overpriced, people don't buy. Delaying the inevitable still isn't going to cause more to buy because those who wanted the product already have it.
Posted on Reply
#21
Fluffmeister
Funny isn't it, just looked at Scan.co.uk and it always surprises me cards like the Asus RoG cards are amongst the hot sellers despite the fact the same performance can be had for a whopping £150 less.
Posted on Reply
#22
jabbadap
Casecutter
This is what would be useful knowing going forward, which pieces of silicone are they holding? I would say you're right in thinking gp106 and gp104. But given they just release the 1050 3Gb I'm not sure they might have gp107's they what to move out. If the gp104 that makes sense as that can be used in that GTX 1060 6Gb the released just last March. Although, with GDDR price and availability they won't want 8Gb cards (1070/1080) while they don't want to flood the market with high-end card as that reduces the pool of those who would look at Next-Gen. While they don't want to flood the market with GTX1060 6Gb as that would stagnate the market of 1440p G-Sync they've told monitor vendor looking to push next.

Your correct in the ideas of loss of R&D prowess as they have to "rollup" some acceptable architectural improvement into a further down the road architectural roadmap, where that is lost in the big picture and can't capitalize on such R&D time and effort. And this is true not just for Nvidia but the Gaming Houses that are aligned with Nvidia and their Gameworks add-ins.
Well there was that rumor of new gtx1060 version of gp104, which might be related to this too. And yeah like you said 3GB version of gtx1050 is other candidate, fewer gddr5 chips more working cards to get. Both are rather mid-to-low end graphics card. That if nvidia releases Gx-104 new generation graphics card relative soon, they can still sell those without lowering their current pricing couple of months from now.
Posted on Reply
#23
Assimilator
Papahyooie
Why don't they just release the next generation, and rebrand these chips as "GT" 11 series cards? They do that kind of thing all the time. It's just OEM. Let's be real here, nobody buying OEM will know the difference, and does it really matter what number is printed on it?
Very valid point that kinda blows this news piece's whole argument out of the water.

Fluffmeister
Funny isn't it, just looked at Scan.co.uk and it always surprises me cards like the Asus RoG cards are amongst the hot sellers despite the fact the same performance can be had for a whopping £150 less.

Probably because people still remember the EVGA thermal pad debacle.
Posted on Reply
#24
Casecutter
jabbadap
Well there was that rumor...
I didn't take it as rumor it's in the TPU Data Base as the GP104-150-A1. Nvidia will have a headache if they have a lot of gp104's as they sure don't want gamer's seeing such GTX 1060, while a decent card, turning away because they don't see the value. Nvidia absolutely does not want to "fire-sale" them because that would lower the 'perceived price" they intend to maintain the mid-range GPU segment at... basically > $300 they're holding to now. Next gamers won't be compel such cards are 1040p ready, like the next-gen for all intents and purposes should provide. So, all those gamer are left stagnated at 1080p.
Nvidia has a thin rope to walk.
Posted on Reply
#25
Totally
Assimilator
Very valid point that kinda blows this news piece's whole argument out of the water.
It wouldn't work because oems wouldn't pay or charge what Nvidia wants. If by chance Nvidia did cut a deal unload the rebranded GPUs, savvy buyers would scoop them up while they are on the cheap indirectly causing the exact scenario Nvidia doesn't want.
Most likely these are to be crippled, and packaged as a limited-market release version lesser card that sells e.g. if these were 1080tis they be crippled to the neighborhood of
1070/1070ti performance and sold only in China.
Posted on Reply
Add your own comment